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Say the word “market,” and what comes to mind? Financial markets, maybe, or supermarkets. There are markets in real estate, markets in used cars, markets filled with farmers selling green beans and cheese. But a market in human fertility—sperm, eggs, hormones, surrogate mothers, embryos? Babies, or the means to make them, aren’t supposed to be sold. They aren’t supposed to be bought. They aren’t supposed to have prices fixed upon them.

But there is a market for babies, one that stretches across the globe and encompasses hundreds of thousands of people. This market doesn’t work like the markets for green beans or mortgages. Its high prices are more stubborn than the usual adjustments in supply and demand normally produce, it can never fully provide all the goods that are desired, and the role of property rights—the underpinning of most modern markets—remains either ambiguous or contested.

What has created this market is a deep and persistent demand from people who have been denied the blessings of reproduction, along with a wide and steadily increasing supply of ways to produce babies when nature proves inadequate. It includes businesses such as for-profit fertility clinics and drug companies that sell their wares in this market, charging often hefty sums along the way. In 2001, nearly 41,000 children in the United States were born via in vitro fertilization (IVF). Roughly 6,000 sprang from donated eggs; almost 600 were carried in surrogate, or rented, wombs.

Some people lament the very existence of this baby trade, insisting that reproduction—like love or honor—should never be sold. Some argue that the cutting edge of reproductive science violates the rules of nature and degrades all of the participants. Yet the baby business is alive and well and growing. And the demand for it is so widespread and powerful that any attempts to stamp it out would almost certainly fail or do harm. If the baby trade were to move to a donor model like the one governing organs, for example, it would probably face comparable shortages: fewer women willing to donate eggs, fewer surrogate mothers, and a smaller supply of sperm. At the same time, a black market for these components would probably arise, much as it has for kidneys and other vital organs. Similarly, if governments were to outlaw the trade completely, people desperate for children would scramble to find illicit providers, subjecting themselves to legal and medical risk. Unlike outlawed trades such as drugs or prostitution, moreover, the baby business creates a product—children, for people who want them—that is inherently good. The market may make people uncomfortable, but it’s more efficient than the alternatives, and it provides inestimable value to those who choose to purchase.

Even so, the United States is the only major country in the world whose national government has chosen not to address the complex issues of equity, access, and cost that are raised by the baby trade. The federal government has been exceedingly wary of imposing limits on high-tech baby making, preferring to let the courts, the markets, or the state legislatures sort things out. (See the exhibit “Rules, Regulations, and the Gray Area.”)

Rules, Regulations, and the Gray Area

The U.S. government and the states take a broad range of approaches to the regulatory treatment of reproduction’s components. Sperm is subject to only the barest hint of regulation; eggs face more complicated rules, as this sampling of state policies shows. Surrogacy is fully legal in some states and illegal in others and largely ignored by federal legislation. This inconsistency betrays an unfortunate unwillingness on society’s part to wrestle with the propriety of parental decisions that will have far-reaching consequences.

In other countries, meanwhile, the fertility trade is regulated to varying degrees.

Part of this reluctance may be rooted in America’s typical laissez-faire response to emerging markets. Unlike its European counterparts, the U.S. government historically has been loath to constrain high-growth, high-technology markets and industries. The U.S. mobile phone and Internet industries, for example, arose in largely deregulated markets.

In the baby business, legislators’ reluctance to regulate is exacerbated by a profound fear of religious or ethical entanglement. Because the abortion debate in the United States has been so divisive, politicians have avoided pursuing any policy agenda that touches it even lightly. As a result, there are no national policies on IVF, which requires creating and often discarding embryos; none addressing genetic engineering; and none on the permissibility of preimplantation genetic diagnosis (PGD), which involves examining an embryo for signs of genetic disease before its implantation in the uterus.

Other countries are far more explicit. In Israel, for example, assisted reproduction is touted as a national good. Accordingly, Israel permits (and only lightly regulates) most forms of high-tech reproduction and pays for a couple’s fertility treatments until the couple has two children. In Germany, a deep-seated wariness of genetic manipulation has manifested itself in more restrictive legislation: no egg transfers, no surrogacy, no PGD. And the UK has an agency, the Human Fertilisation and Embryology Authority, that oversees all aspects of Britain’s reproductive trade. It licenses and monitors all IVF clinics, sets price caps for egg donation, and assesses applications for PGD.

In the United States, this kind of authority would almost certainly come under attack. As an over-50 mother of newborn twins said: “I had my babies. I paid for my babies. I could afford my babies. Why is it any more complicated than that?” Similar (though perhaps more subtle) sentiments are voiced by many practitioners in the fertility industry, who worry that regulation of their trade could become expensive, unwieldy, and unfair. One prominent specialist argues that any regulation would slow medical progress in his field: “We have been able to sail under regulatory visibility,” he notes. “If we had been under scrutiny, many steps would have been forbidden.”

Although U.S. fertility practitioners generally seem delighted to remain in the gray area of self-regulation, the history of technological development in other sensitive trades suggests that some widening of availability and the introduction of property rights, rules, and institutional policies would make the baby trade more responsive to the social, medical, and ethical issues that are emerging from its science. Right now, there is little reason for any provider—drug company, fertility clinic, sperm bank—to wrestle with these concerns. Should there be age limits on fertility treatments, for example? (Fertility clinics’ most profitable patients are those women least likely to conceive.) Should new procedures be subject to rigorous testing protocols? Should multiple births, which often result from the multiple implantations intended to increase the likelihood of at least one embryo’s viability, be controlled or limited?

In the absence of outside pressure, the market will try to satisfy most client desires in the interest of creating new business. Yes, a 63-year-old woman can choose to undergo IVF. Yes, a family with a daughter has the right to ensure that its next child is a son. Yes, a couple can proceed with the birth of IVF-induced quintuplets. And perhaps these individuals should indeed have these freedoms. But one could argue that these are not the kinds of questions that markets answer best. What happens when the 63-year-old sues the fertility clinic for damages because she has given birth to a severely deformed child? And what if hospitals and insurance companies balk at covering the costs for quintuplets? In the absence of accepted guidelines, private firms and independent physicians are likely to pass along to the rest of society the costs of decisions they are not fully authorized to make.

What Sort of Market?

It is entirely possible to conceive of the reproductive market in the United States as a small enclave of science. The market is irrelevant to 85% to 90% of the population—that is, to those lucky enough to conceive children the old-fashioned way. Nearly by definition, then, it shouldn’t share the traits that characterize the markets for potato chips or sneakers or even general health services. It is a niche market, one that is unlikely to expand beyond a small segment of customers. Most of these potential customers, moreover, never avail themselves of any form of treatment: Only 36% of infertile women in the United States seek medical assistance in conceiving, 15% use fertility drugs, 5.5% employ artificial insemination, and only 1% try IVF or other high-tech treatments.

Those who do enter the market are decidedly wealthier and better educated than average, paying $12,400 for an average cycle of in vitro fertilization, $3,500 for PGD, and up to $50,000 for the eggs of select Ivy League women. The firms that service this clientele are highly concentrated and profitable. The global market for sperm, for example, is dominated by a small number of high-volume, high-profit firms. So is the market for the hormones that women take to induce ovulation. Makers like Serono and Organon International (a subsidiary of Akzo Nobel) face limited competition and almost no downward pressure on prices. Egg brokers and fertility centers are newer entrants to the trade but seem already to be evolving along a similar course, with smaller centers consolidating into networks like Integramed America and larger centers like Boston IVF reaping the substantial profits of scale.

Yet experience outside the United States and in other industries suggests that the U.S. fertility trade could follow a very different route, one that embraces a larger market in exchange for substantially lower prices and a modicum of regulation. Even if prices were capped below current levels, an increase in demand could significantly offset any downward pressure on profits per client. Likewise, greater regulation of fertility clinics might well expand the market for reproductive services and make the industry safer and more equitable. In Denmark, where the state guarantees three free cycles of IVF to all infertile women under the age of 40, demand for the treatment is widespread: In 2001, 3.9% of all Danish babies benefited from assisted reproduction, compared with less than 1% in the United States. In England and Israel, too, state funding has reduced the price and expanded the demand for treatment.

Greater regulation of fertility clinics might well expand the market for reproductive services and make the industry safer and more equitable.

Recent developments also suggest that the demand for fertility treatment could soon extend beyond the infertile population. In just the past few years, healthy young women have started clamoring for services like Extend Fertility, which promise to freeze their eggs as a hedge against late marriage or a prolonged career. Soldiers can already freeze their sperm before going off to war, and homosexual couples could use assisted reproduction to conceive and bear offspring that are genetically related to both parents. Such applications could add millions of customers to the fertility trade—but only if prices come down, access is widened, and rules are established.

The fertility market could well follow the pattern in industries such as personal computers and DVD players, where goods that were initially considered luxury items migrated over time to the mass market.

This widening need not interfere with the pace of scientific progress. For although privately funded researchers in the United States have contributed mightily to the emerging science of assisted reproduction, so have researchers from the UK, France, Israel, and Australia, where fertility clinics and access to fertility services are regulated much more tightly than in the United States. The market could well follow the pattern in industries such as personal computers and DVD players, where goods that were initially considered luxury items migrated over time to the mass market, earning their manufacturers the revenues to finance further innovation.

A Better Market

If the baby trade is to develop into a broader and more normal market, it will also need to acquire at least some semblance of property rights. Defining these rights would not resolve the deep moral issues that this market raises. They would certainly not ease the concerns of those who view reproductive medicine as a step toward the commoditization of both children and families. But property rights could at least provide a framework for discussion and for clarifying, at a minimum, who has the right to create, dispose of, implant, and exchange embryos. Similar guidelines could easily cover the component side of the market, clarifying ownership rights involving eggs, sperm, and wombs. Supported by rules and policies, the fertility trade would have a better chance of producing happy, healthy children, matched more consistently and at a lower cost to the parents who so desperately want them.

Defining property rights would not resolve the deep moral issues that this market raises. But it could provide a framework for clarifying who has the right to create, dispose of, implant, and exchange embryos.

Economists have long argued that property rights are critically important to any modern market economy, the first step in a long and often arduous trek toward commercial development. If people want bread on their tables, farmers need to know that the wheat they grow will be theirs to sell. If high-tech industries like software or biotechnology are to develop, the firms that invest in those technologies need to know they can recoup their investments by bringing the resulting products to market.

Economists have long argued that property rights are critically important to any modern market economy. In the $3 billion baby business, though, such rights are essentially nonexistent.

In the $3 billion baby business, though, such rights are essentially nonexistent. Consider two cases. In 2003, a retired firefighter sued a Boston fertility clinic for implanting in his ex-wife, against his objections, embryos that the couple had previously produced. And in February 2005, a Chicago couple sued a local clinic for discarding embryos frozen five years earlier.

The firefighter presumed that the embryos he had helped create belonged to him. His ex-wife presumed they belonged to her. If the “property” had been virtually anything but an embryo, courts in Massachusetts would have been able to resolve the dispute rather easily: The divorced couple could have split a contested joint bank account, say, or sold a car. But you can’t split an embryo. More important, the court that handled the case didn’t even want to deal with it as an issue of property. Instead, the jury decided that the clinic should have obtained the father’s written consent and accordingly awarded him compensation for child support.

In the Chicago case, the clinic argued that it had mistakenly destroyed property; the plaintiffs alleged that the clinic had killed their children. The courts were asked to decide: Was an embryo property or a human being? Should its disposal be treated as the destruction of property or the termination of a life? The first judge dismissed the couple’s claims of wrongful death, but the second accepted them. When this article went to press, the case was still wending its way through the Illinois legal system.

How are we to resolve these cases without some common underlying convictions about either ownership or contractual rights? Do parents own the embryos they produce? Do clinics? Or are they the property of the state? Do frozen embryos have a right to be born (a right currently denied to other, implanted, embryos)? Or, if they are defective, a right not to be born? Do they have a right not to be used for research? To inherit things? For that matter, does a sperm donor have any rights involving the offspring he genetically fathers? Does he have responsibilities? What about an egg donor? Or a surrogate mother? If an infant has three potential mothers (the egg donor, the surrogate carrier, and the intended mother), how does a court decide whom to favor?

A system of contracts and property rights—even a rudimentary one—could help bring some measure of clarity to this confusion. It could delineate not only who has rights to what forms of genetic or social offspring, but under what conditions those rights can be expanded. It could establish by law not necessarily who has ownership of a particular child but who has the right or responsibility to parent that child.

Establishing a property rights regime for sperm, for example, should be relatively easy. Laws could establish whether men have any lingering rights to the children created by their sperm and whether (or under what conditions) these children could uncover their genetic heritage. Similar rules could cover eggs and, with somewhat more difficulty, wombs. One could imagine a regime that worked as follows. Female donors (or surrogates) could agree at the outset to the kind of relationship that would exist between them and an eventual child. They would then know, explicitly, what rights they had with regard to this child and what kinds of decisions were theirs to make. Theoretically, such a system could incorporate provisions from the world of adoption, including a mandatory waiting period after the child’s birth, during which the birth mother (or egg donor) would retain all rights to the child. Once she agreed to relinquish the baby, though, she would forfeit any subsequent rights to parent the child.

A system of property rights could also define the limits of the market, separating those elements—sperm, eggs—that can be sold or, in the case of wombs, leased, from those that cannot. In particular, it could draw a much clearer line between the components of reproduction and the babies themselves, ensuring that parents do not profit from relinquishing their offspring. Men could still sell their sperm, women could receive compensation for reasonable pregnancy expenses, and intermediaries could charge fees for managing these exchanges. But while mothers and fathers could renounce their right to parent a particular child, they could not sell their parenting rights to others. Essentially, this is the fine line that already exists—and generally works—in the area of adoption.

Note that in this type of system, potential offspring would not be treated as property per se. They wouldn’t be bargained for or sold, and their humanity would never be called into question. Instead, market participants would be furnished with a sense of order and predictability, a set of norms that would prescribe behavior and establish the limits of acceptability. These norms would allow people to transact more securely and to know the rules beforehand. Creating property rights for the baby business would neither, as critics assert, turn children into commodities nor mothers into baby machines. It would not tarnish reproduction or turn intimate relations into financial ones. Instead, property rights would help codify transactions and procedures that already take place and thus resolve disputes that lead too often to tragedy.

Beyond Property Rights

A baby business governed by a system of property rights is a vital intermediate step that would bring clarity and predictability to the market. The introduction of these rights would not, however, tell us which pieces of this emerging technology are acceptable or for whom. Therefore, society also needs to decide how much control parents can exert over their child’s conception and genetic makeup and what part of the conception society should pay for. These are exceedingly difficult, Solomonic choices. Yet at the moment, we are making them in a purely ad hoc way—depending on the particular state, the local court system, and the finances of the individuals involved. A far better approach would be for Americans to decide, as a society, just what we consider acceptable in the baby trade. Are we comfortable allowing commercial exchange in the pursuit of procreation? Are we willing to permit parents and their doctors to manipulate the embryos that will become their offspring? How will we determine which procedures push the trade too far? Any one person—this author included—is likely to have strong views on each of these questions. But the process here is far more important than any single set of conclusions. Americans need to debate these questions. For without such a process, we will never be able to arrive at a regulatory strategy that sticks.

Admittedly, the politics of this process will be tough. Americans may never agree on the moral issues that surround the baby trade or on the rules that should guide it. But if we break this debate into several manageable pieces, thinking of the baby business in terms of principles rather than problems or technologies, we may find a route to consensus and thus to effective policies. There are five areas that should be considered in the debate over making the baby business both efficient and decent.

Access to information

Most Americans view information as a public good. We are happy to have the government provide it for free (or require others to do so), and we believe others should have access to information as well. This set of preferences is particularly strong in matters that relate to health and safety, which explains why the United States has long had warning labels on consumer products and dosage information on drugs. Applying this preference to the field of reproductive medicine would be relatively straightforward. It would simply suggest a light-handed regulatory regime in which providers of assisted reproductive services would be required to inform potential clients of the costs, benefits, and potential dangers of their services. The government could subsequently decide to aggregate some of these data or to commission additional studies of longer-term risks. In any case, the essential idea would be to determine what information is important to the health and safety of the American population and then to provide it.

Already, the outlines of such provisions are in place. In 1992, Congress passed the Fertility Clinic Success Rate and Certification Act, which requires fertility clinics to submit basic statistical information to the Centers for Disease Control. In 2004, the President’s Council on Bioethics recommended stiffer penalties for clinics that don’t report their data, and it recommended longitudinal studies of children born through assisted reproduction. Should Americans decide that they need more information about the effects of high-tech baby making—about the impact of hormone treatments, for example, or the costs of labor and delivery for mothers over 40—the release of different kinds of data could similarly be required.

Equity.

The United States guarantees equal education for children and gives all citizens equal protection under the law. Although there’s no guarantee of equal access to health care, Americans do in many situations apply the notion of equity to the medical realm: Donor kidneys can be had even by the poorest patients, for instance, and free prenatal care is extended, by statute and regulation, to nearly all women. Various aspects of the baby trade could receive similar treatment. Legislators could, for example, decide to designate infertility (under certain conditions) a disease and require that treatment be distributed equitably among its sufferers. Or they could decide that having children is a basic right and that society therefore needs to find some way to provide at least one child to everyone who wants to be a parent.

Note that the equity principle does not dictate a particular policy outcome. Instead it provides a relatively neat way of framing an otherwise messy and complicated debate. What is it about reproduction that society might want to distribute fairly? Is it a pregnancy? A child genetically related to both parents? Simply a chance at parenthood? If it’s the first of these options, then implementation would involve providing assisted reproduction services to all kinds of prospective parents and either subsidizing or reimbursing the cost. If it’s the second, then taxpayers wouldn’t need to cover forms of reproduction that involve third-party sperm or eggs. And if it’s the third, citizens would probably want policies that favor adoption over fertility treatments. Yet the logic in these cases is precisely the same. As a society, we need to consider what, if anything, we want to distribute equitably. Then we need to decide how to accomplish this distribution and cover its inevitable costs.

Legality.

While the baby business is full of parents who don’t get the children they crave, certain clinics and middlemen arguably carry the pursuit of babies too far. A central question, then, is where to draw the line between legitimate and illegitimate practice. Currently, there are few laws in this field and few politicians willing to tackle a subject that touches both on the question of abortion and on the deeply held desires of those most likely to be affected by any restrictions or bans. Yet even in this intimate area, Americans could still consider where in the baby business they want to limit either technology or parental choice. Some of these lines exist already. Cloning for reproductive purposes, for example, is explicitly banned in the United States. So is cytoplasmic transfer, a process in which donor cytoplasm is used to refresh the egg of an older woman. Other U.S. laws prohibit birth mothers from selling their children and define the legitimate boundaries of reimbursement. Americans could, if they chose, draw similar lines in other areas of the baby business, explicitly limiting parental choice or the reach of technology.

Cost.

In the baby business, even private transactions can impose costs on the rest of society. Consider, for instance, the babies born to 25-year-old Teresa Anderson of Mesa, Arizona, in April 2005. Anderson was a gestational surrogate who, for $15,000, had agreed to carry a child for Enrique Moreno, a landscaper, and his 32-year-old wife, Luisa Gonzalez. To increase the chance of pregnancy, doctors transplanted five embryos into Anderson’s womb. They all survived, and Anderson subsequently bore quintuplets for the couple. When the babies arrived, the news media showed the smiling surrogate, the delighted couple, and the five relatively healthy babies. These babies, however, were extraordinarily expensive: The costs of delivery almost certainly ran to well over $400,000. Gonzalez and Moreno paid to conceive these children, but U.S. consumers—through increased insurance fees and hospital costs—are paying, too. According to one recent study, the total cost of delivering a child born through IVF ranges between $69,000 and $85,000. If the child is born to an older woman, the cost rises to between $151,000 and $223,000. The prospective parents in these cases pay for part of these costs—the IVF, the hormones, the multiple medical visits—but their fellow citizens are paying as well. (See the exhibit “What Price Babies?”)

What Price Babies?

Depending on what method they choose, where they live, and what sort of insurance coverage they have, would-be parents who use assisted reproduction face costs that can be enormous.

Society also pays the costs that accumulate as these children grow up. Currently, about 35% of births resulting from IVF and intracytoplasmic sperm injection (ICSI), a relatively common procedure in high-tech pregnancies, are multiples. While most of these newborns are perfectly fine, a significant portion arrive prematurely or under weight, conditions that can burden them with problems later in life. Approximately 20% of low-birth-weight children suffer from severe disabilities, while 45% need to attend special-education programs. So individual choices about procreation generate costs for society at large, not to mention for the children themselves.

In these cases, Americans may choose to pay the steep costs of assisted reproduction and to embrace the technologies that impose those costs. Or they may not. The cost consideration merely helps frame the policy debate. In so doing, it forces society to address the question of how much it values the various outcomes of the baby business. If the cost of delivering quintuplets is exceedingly high, then perhaps there should be a limit on the number of embryos that can be transferred in a single cycle of IVF (most European countries already have such limits). If the overall costs of IVF babies are deemed too great, then perhaps access to the technology should be limited to clients who can pay.

Parental choice.

In choosing to conceive a child, parents have to make decisions that run from the prosaic (Is this the right time?) to the profound: Should I create a second child in the hope that some of his or her bone marrow could save my first, who is suffering from leukemia? Am I too old? Too sick? Too single? Since the advent of assisted reproduction, Americans have shied away from interference in these choices, believing that their rights to privacy and procreation shield essentially all aspects of reproduction from government prying.

As the baby business expands, however, a zone of parental privacy may be increasingly difficult to maintain. Confronted with the costs of delivering high-tech babies, of educating disabled children, and perhaps of caring for youngsters orphaned by elderly parents, society may become more willing to set limits on who can make use of assisted reproduction and when.

Other questions are potentially even more vexing. Should society take it in stride if gender ratios are shifted by a generation of parents separately making the private decision to conceive either a boy or a girl? Should parents be allowed to manipulate their gene pool to produce offspring who are taller, smarter, or more athletic than they would have been otherwise? What if cloning were to become a realistic reproductive option? At that point, procreative choices would become more than personal. They would affect the very core of how people reproduce themselves and their society.

Thus, as the technology of procreation evolves, society may well want to revisit the bounds of privacy and parental choice. What kind of control should parents have over the fate of their offspring? And what controls should they be denied? Already, Americans draw these lines in more mundane realms. Under U.S. law, for example, parents can choose to educate their children at home, have them tutored, or send them to any of a wide variety of schools. They cannot, however, choose to deprive their children of an education. Similarly, while parents can opt to serve their teenagers beer or give them guns, they cannot let their children purchase beer or attend school with guns. Parents’ rights to administer or withhold medical care are also circumscribed. In all these cases, society sets clear limits on what families can do and where parents’ desires for their own children must give way to the interests of others.
• • •

As changing demographics and social mores collide with exploding technological advances, more and more people will desire the goods and services that allow them control over conception. They will want to decide when they conceive and how they conceive and even, increasingly, the characteristics of the children they raise.

If this market isn’t to balloon out of control, society has only four options. First, it could leave the baby business to the vagaries of market forces, allowing supply and demand alone to determine its shape. In that case, supply would increase, but only the rich would enjoy the benefits. Second, society could vainly attempt to ban the baby business altogether after deciding that its risks and inherent inequities are simply too great. Third, it could treat high-technology reproduction as it treats organ transplants, allowing the science to flourish but removing it completely from the market. Societal pressure to maintain an open market, however, would be all but insurmountable; unlike the organs of living or recently deceased people, a supply of eggs, wombs, and embryos is already available, and the players are in place.

Which leaves us, really, with the best and most feasible option: U.S. society needs to decide how to regulate the baby trade and how to make the market work better and more equitably.

Debora Spar is president of Barnard College and the author of numerous books, including, most recently, Wonder Women: Sex, Power, and the Quest for Perfection. Prior to her arrival at Barnard in 2008, Spar was the Spangler Family Professor at Harvard Business School. Spar also serves as a Director of Goldman Sachs and trustee of the Nightingale-Bamford School.

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